Philip Ellender, president of government and public affairs for Koch Companies Public Sector, LLC, issued the following statement this evening commenting on the JCT’s analysis of the Senate’s tax bill:
“The Joint Committee on Taxation’s (JCT) analysis of the Senate’s tax bill released Thursday evening is based on a faulty premise. Aside from lacking transparency in its modeling, its findings rely on an attempt to forecast what interest rates will be 10 years from now. This is troubling. For years, the JCT and CBO have been wrong with such predictions. For example, in 2013, the CBO predicted that the interest rate on the 10-year Treasury note today would be 5 percent. It’s now 2.37 percent. That’s more than a 100 percent disparity. Even the Federal Reserve—the entity responsible for interest rates—has repeatedly forecasted interest rate increases that never came.
A government agency taking this flawed approach to such an important analysis should leave all lawmakers skeptical of the results.
In contrast, a Quantria/Inforum(UMD) study of the same bill published this week found about $1.1 trillion in tax revenue as a result of dynamic growth, while also achieving revenue neutrality if scored against a current policy baseline. This study, compiled by former JCT economists and a sophisticated dynamic model housed at the University of Maryland, took a more measured approach to interest rate predictions. It also provided over 50 pages of detail on assumptions, methodologies, and modeling mechanics.
As lawmakers continue to advance comprehensive and pro-growth tax reform, we urge them to weigh the JCT analysis with caution.”